UK house prices rose 0.2% month on month in November in the latest sign the housing market may be stabilising, new figures revealed.
The Nationwide House Price Index showed that on an annual basis prices fell 2.0%, an improvement from October’s 3.3% annual decline.
Robert Gardner, Nationwide's chief economist, said it was the “third successive monthly increase,” with the annual figure “the strongest outturn for nine months”.
“There has been a significant change in market expectations for the future path of Bank Rate in recent months which, if sustained, could provide much needed support for housing market activity,” he said.
“In mid-August, investors had expected the Bank of England to raise rates to a peak of around 6% and lower them only modestly (to c.4%) over the next five years.”
“By the end of November, this had shifted to a view that rates have now peaked (at 5.25%) and that they will be lowered to around 3.5% in the years ahead,” he added.
But Gabriella Dickens at Pantheon Macroeconomics warned not to “get too excited about the prospect of a sustained recovery just yet”.
She thinks the rise in Nationwide’s index over the last couple of months will reverse in the very near term and a material recovery in house prices still looks a few months away.
Nonetheless, shares in housebuilders took heart and advanced in early trading – Taylor Wimpey PLC (LSE:TW.) rose 0.9%, Barratt Developments PLC (LSE:BDEV) climbed 0.6% and Berkeley Group Holdings PLC (LSE:BKG) gained 1.1%.